The naira closed flat at 445 against the United States dollar at the parallel market on Monday as the foreign exchange market awaits the further release of the greenback by the Central Bank of Nigeria.
The CBN has sold additional $180m into the market this week, barely one week after selling about $600m.
The steady supply of forex is in line with the modification made to the forex policy by the regulator.
The CBN last Monday commenced the implementation of the reformed forex policy with a promise to sell $1m weekly to each of the 21 commercial banks in the country.
The local currency, which had tumbled to 520/dollar last Monday, closed at 450 on Friday.
Forex traders said that on Monday the naira closed flat because there was no release of fresh funds into the market.
Following last week’s announcement of the new forex policy measure by the CBN, the naira commenced a gradual reversal of its previous losses, closing at 512/dollar last Tuesday.
It recorded further gain last Wednesday and Thursday, closing at 505/dollar and 495/dollar, respectively.
Foreign exchange traders said the CBN had intervened in the official market in recent days.
Economic and financial experts on Sunday said that the naira would record further gain this week but not as big as last week’s.
A currency Analyst at Ecobank Nigeria, Kunle Esun said “There is always a restriction point beyond which the exchange cannot cross except there is a huge forex inflow to breach that ceiling.”
“The naira will gain further but it won’t be like last week’s own,”
The Managing Director, Financial Derivatives Company Limited, Mr. Bismarck Rewane, commended the CBN for the policy reform and wondered why the regulator had delayed such measure for months.
Rewane said, “With less than $600m supply into the spot market, the naira had gained 13 per cent of its value to N460/$ as of Friday. Can you imagine what would have happened if the spot market was adequately funded in a transparent manner for nine months ago, rather than the opaque forward transactions
“Maybe we could have had a soft landing rather than a race to the bottom. This move by the CBN is a good one in the right direction provided the dollar supply is sustained.
“We expect the CBN to commit itself to a regular and predictable supply of dollars to the forex spot market in March. There will be a rapid convergence of rates and a gradual end to multiple exchange rates and forex abuse.”
The Managing Director of Cowry Asset Management Limited, Mr. Johnson Chukwu, also said the naira would rise further this week.
Chukwu said, “Confidence is beginning to return to the market. The naira will gain further but there may be resistance around N400/dollar because the CBN sells to the BDCs currently at 381/dollar.
“The CBN needs to watch and sustain this intervention for weeks. They need to work with the fiscal authority to get the $2.3bn loan from World Bank and China released on time.”